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KING: I'm John King. This is STATE OF THE UNION. It's 11:00 a.m. Eastern. Time for STATE OF THE UNION "Sound of Sunday." Thirteen government officials, politicians and analysts have had their say, the White House senior adviser, governor of California and the mayor of New York City. Key lawmakers in the battle over health care reform. We've watched the Sunday shows so you don't have to.

We'll break it all down with our exclusive Sunday duo, James Carville and Mary Matalin. And joining them and the best political team on television, a special guest this Sunday, health care's critical 60th vote in the Senate, Ben Nelson of Nebraska. STATE OF THE UNION "Sound of Sunday" for December 20th.

A confident Obama White House says the new Senate health care bill isn't perfect, but embracing a football metaphor, the administration says health care reform advocates are close to the goal line.

(BEGIN VIDEO CLIP)

AXELROD: We're way deep in the red zone. We're right on the one-yard line. That doesn't mean that we're in. And once the Senate passes this bill, obviously there's work to be done. The House has its version. The Senate has its version. They have to agree. And we're going to have to go through one more round.

I have no doubt that the Republican leadership will try and throw procedural barriers in the way as they have for the last several months. But I think there's a will to get this done.

(END VIDEO CLIP)

KING: Republicans acknowledge Democrats probably have enough votes, but say there's still time to block what they call a bad bill.

(BEGIN VIDEO CLIP)

GRAHAM: Our best player is the American people. So we're in the fourth quarter. This is far from over. The House-Senate bills are in many ways irreconcilable. But you know, I like David. He ran a brilliant campaign. But they're doing a lousy job governing the country in my view. Change you can believe in after this health care bill debacle has now become an empty slogan. And it's really been replaced by seedy Chicago politics when you think about it, back-room deals that amount to bribes.

(END VIDEO CLIP)

KING: The Senate may have that new compromise, but it doesn't mean an end to Democratic infighting. The former chairman of the Democratic Party says his friends are letting the insurance industry win.

(BEGIN VIDEO CLIP)

DEAN: We have committed in this last week of unseemly scrambling for votes, we have committed to go down a path in this country where private insurance will be the way that we achieve universal health care. That means we're going to have a 30-year battle with the insurance industry every time when we try to control costs and try to get them to do things.

(END VIDEO CLIP)

KING: But the Democratic chairman of the Senate Budget Committee says critics like Governor Dean ignore all the good in the legislation.

(BEGIN VIDEO CLIP)

SEN. KENT CONRAD, D-N.D.: This is a bill that does reduce the deficit according to the independent expert. This is a bill that expands coverage to 30 million people. This is a bill that will begin to control the cost explosion, has got critically important insurance reforms, delivery system reforms. So those who say "kill the bill," I think they've really missed the boat.

(END VIDEO CLIP)

KING: As you can see, we've been watching all the other Sunday shows so maybe you don't have to. Joining me in Washington where you can only find them together right here on STATE OF THE UNION, Democratic strategist and CNN political contributor James Carville and Republican strategist and CNN political contributor Mary Matalin. Welcome.

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: Merry Christmas.

KING: I hate to start with a football metaphor.

MATALIN: We were hanging on to the fourth quarter.

KING: We were hanging on to the fourth quarter. But your Saints finally lost last night. Happened to my Patriots in the Super Bowl. So maybe getting it out of the way now will help you in the long run. Let's start, David Axelrod says we're on the one-yard line deep in the red zone. Mary Matalin, you don't like this bill, but are Democrats going to get it?

MATALIN: They are and they're going to get something more, a big loss in the midterms. We've been saying this all along. The more they get, the rougher it's going to be for them in the midterms. And they've made that political calculation that their sacrificial lambs are going to be the blue dogs and they're going to lose all those blue dogs and they may even lose their majority and so be it. They've been on this jihad for 70 years, and they're going to throw over all competitive seats to do it.

And I don't know what kind of party that is. That leaves left and the Democratic Party, the urban centers, this is tyranny of the minority. Two-thirds of the country don't want this. And one-third of these jihadists, these health care jihadists do. I guess that's how democracy in the Obama era works.

JAMES CARVILLE, CNN POLITICAL CONTRIBUTOR: I think they're on the one-yard line. And they'll provide us with some more excitement. And the truth of the matter is that this was much better than any alternative. And by the way, if health care costs double in the next eight years, the Democrats are not going to look good, which has happened in the last eight years.

But look, they got to the 60 votes. They got there. We're a diverse party. We have a lot of different interests in it. But I think they're going to be able to reconcile this in the House. And by most everybody's estimation is, we're going to cover 34 million people and we're going to save a lot of money. And that's a good thing and I think they'll get rewarded for it.

KING: Let's peek at a front page as we continue the conversation. This is from Lake Charles, Louisiana, back home for you guys. "Obama hails health care votes." A lot of focus has been, and we started here focusing on how we're getting here, the process. As James noted, the Democrats saying more than 30 million people will get coverage.

The Democrats insist this bends the health care cost curve and will reduce the deficit. I know Republicans question that math and say there's too many votes -- too many tough choices down the road that they think Democrats won't make. But there has been so much focus on the process James, because the central promise of the Obama campaign was to change the way Washington works, to make people get along, to make it more bipartisan, to make it more transparent. And yet, as you know, this compromise was reached, back-door negotiations, closed-door negotiations, David Axelrod says that's the way it is.

(BEGIN VIDEO CLIP)

AXELROD: Every senator uses whatever leverage they have to help their states. That's the way it's been. That's the way it will always be. Senator Burr and others are actively trying to advocate for their state. Senator McConnell made much of the same comment on the floor yesterday after having included $75 million of earmarks in the omnibus bill that he just voted against for Kentucky. So that is part of the system.

(END VIDEO CLIP)

KING: It's the way it is. It's the way it's always been. David Axelrod is exactly right. Didn't the president of the United States as a candidate say it was going to be different? CARVILLE: Yeah, he did, and it never is different. Look, I mean, they got to 60. There are two kinds of people here. All you see are a lot of people that are, quote, liberals or progressives or whatever. The two kinds of people here, those that can count to 60 and those that can't.

Or more appropriately, those that have to count to 60. Senator Reid had to count to 60. He got the votes, just nothing that you can do -- I guess you could change the Senate rules. But the filibuster as I understand it, is not in the Constitution.

Short of that, there's nothing that can be done. And the lesson here, as long as you have -- and you're right. Some of these people are guilty of being a United States senator as I know Senator Landrieu who did a magnificent thing for Louisiana by getting the complicated Medicaid formula readjusted to this. But sure, senators are going to look out after their own state. That's going to happen. That happens, they have 60 votes. No doubt about it.

KING: Do you have any doubt Senator Nelson gets a good deal from Nebraska? Senator Landrieu got a good deal for Louisiana? You were both here a couple of weeks ago, said the Republican governor wanted that so it's not this horrible Democratic thing. Could you have any doubt that if there's six or eight or 10 of these deals, that two or three years down the road, when that money kicks in, that senators from Arizona and Illinois and Iowa and anywhere else are going to say where's mine?

MATALIN: Remember this. There are no red states. There are no blue states, there are only the United States. No, it's every state for himself. The country is more divided. It is less transparent, less accountable. Of course all these other states are going to get -- which just makes it a bigger piece of what it is which is wealth transfer. Essentially what's happening and what Senator Nelson can speak for himself when he comes out is he's never going to have a Medicaid increase. Well no other state is going to stand for that.

And this is worse, and the American people have said that this is worse than doing nothing, and the White House actuary said it will raise costs to the premium -- raise premiums, raise the debt. It will not cover everybody. It does not bend the cost curve. And furthermore this is the worst thing. They're going to strip out all the few good things that are in there and the entrenched things will stand. That's what's happened with every entitlement jihad from the '30s and the '60s and that's what happened.

KING: And we're not done here obviously. We assume the Senate will keep the 60 votes together and they will pass their bill this week. But then they have to reconcile it with a very different House bill. The House bill has a public option. The House bill pays for it with taxes on the rich, not by taxing the Cadillac health insurance plans like the Senate bill does. A lot of Democratic infighting still to be had because this is a Democratic debate. Let's listen to the former chairman of the party, Howard Dean.

(BEGIN VIDEO CLIP) DEAN: We're all in the same family. But this is a serious business. We have seen essentially a destructive political process in Washington where the insurance company lobby essentially wrote a good piece of this bill. Now I'll admit that they have pulled back in this past week. There are some things in this bill that weren't in there a week ago that make it a better bill. But this can't be the final version of this bill.

(END VIDEO CLIP)

KING: In the Bush years and when the Republicans ran the House and the Senate, the constant Democratic refrain was, they're letting the lobbyists write the bill. You just heard, there, the former chairman of the Democratic Party say the insurance lobby essentially wrote a good piece of this bill. Is that true?

CARVILLE: Well, I don't know, and he's not in the Congress, I would point out. The other thing is, wherever it is -- whatever comes out is going to look a lot more like the Senate bill than the house bill. I think we already know that. In fact, it will look remarkably similar to the Senate bill.

KING: As a campaign guy, does that worry you, if the left so dislikes this bill, even if they have to hold their nose and vote for it in Congress, do you have that intensity gap next year?

(CROSSTALK)

CARVILLE: You know what would really bother me, as a campaign guy, if this thing would have gone down.

If we were sitting here this morning and we wouldn't have gotten the 60th vote and health care would be dead, that would be a horrific outcome for the Democrats.

Now we've got the most significant piece of health legislation in the last 75 years. We're going into this thing with an improving economy. We've got two two-thirds of the stimulus left to kick in. And you know what? The world looks a lot different with this thing getting ready to pass than it would if it wouldn't pass, and politically. And that's just a fact for the Democrats.

Now, whether or not -- we're going to certainly lose some seats. But I don't think we're going to lose near as many as we were before.

KING: One of the things Republicans have said is the Democrats are trying to railroad this all along, rush this along. Democrats counter by saying it's been on the Internet, and as soon as they make changes and amendments, they publish them.

But one of the people -- it sounds like he's echoing a bit of the Republican complaint -- is that New York City Mayor Mike Bloomberg, who supports the president's goal of health care reform but doesn't like the way this debate has turned. (BEGIN VIDEO CLIP)

BLOOMBERG: The other thing that leaves worried is, when I talk to congressmen and senators and say, what's in the bill, none of them really know. It has gotten so big and taken so long and has so many different versions out there that I don't know how you can intelligently decide whether to vote for it or not if you don't know what it's going to do.

(END VIDEO CLIP)

MATALIN: One-sixth of the economy and the overwhelming majority of them have no idea what's in there. We can't even -- the CBO could -- can barely score the thing. Their substantive argument is reduced to we're making history. Yes, they are, horrible history.

This is the first major entitlement program with no bipartisan support. This is the first major program with no popular support. And this is the first piece of legislation that remakes the way we live, and the majority in both houses don't have a clue as to what's in there.

How can we have a debate? How can we -- this is transformative change?

CARVILLE: We -- you say we lack debate on this? We haven't debated it long enough?

(CROSSTALK)

CARVILLE: ... for the entire year.

And, by the way, I wish someone would go and look at the final Senate bill and see what percent of that is the same bill that came out of the Senate Finance Committee, which was debated ad nauseum, ad infinitum, ad anything you can come to. And so somebody at the end of the process adds three amendments. That hardly changes the substance. But I don't think there's a single person out there that hasn't said we haven't had a debate on health care, here, for the last year.

KING: A quick time-out, here. James and Mary are going to stay with us. And when we come back, a very special guest. To get to 60 votes in the Senate, Harry Reid, the leader, needed one, the last holdout, Senator Ben Nelson of Nebraska. Senator Nelson joins us exclusively here on "State of the Union," when we return in just a moment.

(COMMERCIAL BREAK)

KING: Back to continue our conversation. James Carville and Mary Matalin here, but also now with us, Democratic Senator Ben Nelson of Nebraska. Senator, thank you for joining us.

You were the 60th vote. Harry Reid would not be able to go forward as he will in the early morning hours Monday to advance the health care debate without your vote. You held out because you were concerned in part about abortion language. And the House bill that has passed has very restrictive language, sponsored by Bart Stupak, a congressman, a Democrat, who says no federal money will go anywhere near funding abortion.

You have less restrictive language now that you have agreed to in the Senate that you believe still meets your test. But as you know, there are critics in the pro-life movement, the anti-abortion movement, who say, no, it does not. I want you to listen to a Republican colleague, Lindsey Graham, who was right here earlier today.

(BEGIN VIDEO CLIP)

GRAHAM: He gets a compromise. He never runs it by anybody. He gives a press conference saying he solved the problem. And when everyone who cares about it, including Bart Stupak, look at it, they say it's unacceptable. So that's really disappointing. I think Senator Nelson has lost a lot of trust of the pro-life community for pushing a compromise that no one on our side believes works.

(END VIDEO CLIP)

KING: That from Senator Graham. In your home state, Julie Schmit-Albin, the executive director of Nebraska Right to Life, says, "If this is so good for pro-life, why would Senator Boxer and Senator Schumer agree to this?" Senator Boxer and Senator Schumer, of course, liberal Democrats. Did you let down the pro-life movement?

NELSON: No, not at all. As a matter of fact, what they haven't said is that we tried to pass the Stupak language earlier in the Congress last week, and it was called the Nelson-Hatch-Casey bill. It didn't get enough votes. So the choice was do nothing or try to do something in case Stupak is not -- that language doesn't hold in the conference report.

So what we were trying to do is find a way to solve the issue.

I think the language does do it. I disagree with them. I think it's unfortunate they've taken the approach they have, because it's about -- the argument is about a staple. It's about a staple. It's about whether or not you have a rider that you staple to a policy. The rider covers abortion. Or whether you have it -- and for that, there's no separate check required. It would be just -- the requirement would be that the check cover both abortion and the person's portion of the premium.

Whereas what we've proposed is you can have the language in the policy, because it becomes part of the policy as a rider or an endorsement, but you have to write a separate check for just the abortion portion of it. If it's $5.00 a year, it's $ $5.00, a separate check, as well as a separate check for the rest of your coverage. Only in public plans.

KING: But if you had held out, Harry Reid can't do this without 60 votes. If you had said Stupak language or nothing, wouldn't you -- wouldn't Harry Reid have to give in eventually? NELSON: Well, I don't know, you know. It seems to me that they're more likely with the harsh feelings about this issue, that it would be more likely that it would have then gone to reconciliation.

I mean, I think people have to understand, 60 votes may be 60 votes to go through the ordinary process. But 50 votes, a simple majority, could be required by going through the whole process called reconciliation. Then you wouldn't have gotten Stupak, you wouldn't have gotten Nelson-Hatch-Casey. You would (ph) have gotten what's in the bill right now.

KING: I want James and Mary to jump into the conversation at any point and ask a question of Senator Nelson, if you want. We'll have a conversation.

I want to move on to another piece of the substance of what you negotiated in a minute, but let me start with politics for a second. There are some who say former governor, now Senator Ben Nelson, enjoys this perhaps a bit too much. Some of your liberal colleagues say, you know, you just love this, that you love the spotlight, you love the limelight, you love being able to be the guy with the leverage.

NELSON: Well, I don't think that's accurate at all. I mean, I couldn't create the opportunity to be the 60th vote. It happened. And to them, I would say, look, if you think it's fun having both sides on an issue mad at you when you're trying to do something in good faith, just think, it's like going home and getting bit by the family dog. So how -- who enjoys that?

CARVILLE: Senator, if I could ask you, you were the governor of Nebraska for eight years, been in the Senate for some time now. Where would you write this health care fight? Is this the most contentious thing that you've ever been through of all of the struggles you went through in politics?

NELSON: I used to have to deal with a unicameral legislature, and occasionally we'd have a contentious subject we had to deal with, a policy issue. But this is the high, tense -- the high intensity here is as harsh and as unforgiving and unrelenting as I have ever seen it in my nine years.

CARVILLE: You're surviving -- you're a Democrat in a very, very red state. Sometimes do you get frustrated if you see some commentators saying, well, you should do this or you should do that, and wondering if they ever knew what it was like? I'm living in Louisiana and I wonder if some of these people have any idea what it's like to run as a Democrat in a place like Louisiana and Nebraska.

NELSON: Well, you know, I'm an independent-minded sort of person. And I think that's demonstrated. I don't take my marching orders from a party or a group or any other entity. And as in this case, I put together what I thought was appropriate, and I'm sorry that both sides didn't enjoy it. And that's the way it works. I'm an independent type of person. I'm not a lone eagle. I do consult. I do get input. But at the end of the day, I make my own decision about what to do. MATALIN: Senator, can I ask you, since you were so instrumental in Bush's, President W. Bush's tax cuts -- I'll never forget the Cheney napkin, which I think you have in your office, where you read that's how we finished up with that brilliant tax cut, which resulted in the longest successive numbers of growth that we've had...

KING: Mary is for the Bush tax cuts. I don't know if you noticed that, but Mary is for the Bush tax cuts. MATALIN: Which leads to my -- so thank you for that work, which leads to my real question, everybody's question and why the polls show consistently and have through the whole year, not just opposition but intense opposition. How are we going to pay for this? There is a number of things in there that are cost -- are payment vehicles, but none of them are sustainable. You know from your work on tax cuts that when you overtax something, you get less of it. You cannot sustain through tanning salon taxes this trillion dollar, 10-year, budget-busting legislation.

NELSON: Well, there are some opportunities in there for savings, and I think what really boils down to is the cost savings to individuals.

The question really is, what happens if we don't do something here? When you've got the cost of health care and health insurance premiums going up at the rate of 10 percent per year over the last eight years and projected to go at that same level indefinitely, you have Americans just about to be priced out of the insurance market at some point. You already have a number of them falling off every day from the insurance rolls.

So stepping to the forefront on this is extremely important. That's what -- why I finally at the end of it all decided there ought to be a way, and we need to try to work together to get something accomplished.

KING: To that point and to Mary's point specifically about how do we pay for this and should we trust the numbers that say the deficit will go down and the cost curve will be bent, among the other things you negotiated was a few years down the road, the formula in the bill now would pass off some Medicaid costs to the states. And you cut a deal where you said the federal government is going to pay Nebraska's share. Again, Senator Graham, your Republican friend, was here this morning and he says that is a bad deal for the country.

(BEGIN VIDEO CLIP)

GRAHAM: Medicaid deal for Senator Nelson. There's one state of the union where new enrollees for Medicaid will be signed up and it won't cost anybody in that state money. It's not my state. I have got 30 percent African-American population, a lot of low-income African-Americans on Medicaid. I don't know what the numbers are in Nebraska, but I want my attorney general -- there are a lot of people, Republicans and Democrats, are upset by this.

Is it constitutional? I want the attorney general of South Carolina to look at this.

(END VIDEO CLIP)

KING: Senator Graham asked the constitutional question, should you give one state or two states a special deal? Let me ask a different question. You were a governor. You know, and you did this on behalf of your governor, a Republican at home in Nebraska. But you know, and Mary Landrieu -- we were talking about this -- of Louisiana, did something on behalf of her Republican governor. But there are 48 other governors out there, Democrats and Republicans, and maybe there will be an independent or two. Do you have any expectation that the math in the current Senate bill will be viable two or three years down the road when every state in the country and every governor in the country says, I want what Nebraska got?

NELSON: Well, you know, look, I didn't ask for a special favor here. I didn't ask for a carveout. What I said is the governor of Nebraska has contacted me, he said publicly he's having trouble with the budget. This will add to his budget woes. And I said, look, we have to that fixed.

KING: Arnold Schwarzenegger says it's $3 billion in California. When every one of these governors starts doing this, does that document the Senate Democrats put out that says it cuts the deficit, it bends the cost curve, is it worth the paper it's printed on once all these other governors start raising their hand?

NELSON: Well, if the money isn't there, then the requirement needs to go away. In other words, I've always opposed unfunded and unfunded federal mandates, as governor, as a senator. It happens all the time. Something is added that sounds good. Then the money is pulled back by the federal government.

As a matter of fact, in 2003, as part of the tax cuts, Senator Collins and I, Senator Rockefeller and then-Senator Gordon Smith negotiated what was called the FMAP fix, and that was $20 billion that went to the states to cover their growing costs of Medicaid. I have got a track record of constantly trying to help the states deal with their Medicaid problems.

KING: And if we keep coming back...

(CROSSTALK)

KING: In the future, but if we keep coming back to do that in the future, can we believe on this day, can we pour cement on the idea that this actually bends the cost curve and reduces the deficit, or does it bend the cost curve and reduce the deficit until everybody lines up for their fix?

NELSON: Well, or until the requirement that's put in place is relaxed and goes away. And then the obligation on the underfunded federal mandate is gone. And then we go on with the program that's there.

So I mean, it's one or the other. If we're going to -- if we're going to mandate these things on the state, then we have to pay for them. We don't pay for them three years, then pull back on them, leave the mandate there and pull back the federal money. That was my objective, to get that fixed.

They fixed it this way. It's not the way I would have fixed it, but it's fixed, at least at this point in time. But I think in the future, either the mandate goes away or the federal government provides the money, as it should. KING: Senator Nelson is going to stay with us. We're going to work in a quick break. We'll be right back. And joining us as well, the best political team on television. Don't go anywhere.

And again, I want these guys to jump in with the questions into the conversation. But I want to get to a point about the process here, because a number of people have complained, not only -- the Republicans are complaining all these negotiations are done behind closed doors. But when it comes to the deal you struck for Nebraska, Senator Landrieu struck for Louisiana, John McCain looks at this and he says, I thought President Obama promised Washington would be different.

(BEGIN VIDEO CLIP)

MCCAIN: The president of the United States when running said we would have a new way of doing business in Washington, there would be change, we would negotiate across the table, we'd have the C-SPAN cameras in. And obviously, with their majorities -- and I understand majorities -- they decided to govern from the left and without Republican participation. That's why they're in the position of having to purchase the last vote or two.

(END VIDEO CLIP)

KING: Have they purchased your vote? A lot of people are criticizing this process. Is this -- is what is happening and how this is being done, in your view, as a former governor, now a senator, consistent with the president's promise to make Washington different?

NELSON: Well, you know, to make Washington different, you have to have Washington wanting to be different. It's not something that one person can do alone, president or anyone. I don't know that all of Washington wants to be different. And so, they're resisting. And I think that's...

KING: Well, they're resisting, you mean the Republicans won't cooperate? They're resisting. But the Democrats can also do this more openly and say we're going to be an example to you Republicans if you wanted to.

NELSON: Look, I -- my negotiations were what I felt I should do -- should have in changes in the bill. And whether it was getting, for example, the flexible savings accounts, having those indexed rather than just sliced in half and stationary. It was all about something in the bill to make it better.

But I also negotiated out in front and was criticized by Howard Dean and others when I said no public option, no big government-run plan. I said no to several other things out front. So I think it's hollow criticism. I don't think it holds -- just doesn't hold up.

BASH: Senator, one thing I wanted to ask you, as I and others stalked you in the halls of the Capitol over the last week, as you negotiated on abortion, one of the things that you said over and over was that you wanted to check with your interest groups back home, particularly anti-abortion groups. The National Right to Life of Nebraska, your home state. They put out a scathing statement. I'm sure you've seen it. They said that they've been betrayed by Senator Ben Nelson's agreement and they said that you obliterated the hope of pro-life Americans who saw you as the last man standing between the expansion of government funding of abortion and the Hide amendment, which of course is what they say they were trying to preserve.

NELSON: I disagree. I don't think that I did that at all. We tried hard with Nelson-Hatch-Casey to try to get the same language essentially as in the Stupak amendment. That failed. So we went back to the drawing board, trying to figure out how else you could do it.

As I say, the argument is about a staple, whether you have a second piece of paper stapled to a policy or whether you have the -- within the body of the policy, on the front page that there's coverage for abortion, but separate premium checks have to be written for it.

BASH: They don't think that the separation of the funds is really enforceable.

KING: Lets the states opt in or out, correct?

NELSON: Let me also point out that we made it very clear in the language that every state has the opportunity to ban abortion coverage in insurance policies written. As a matter of fact, 12 have already. Twelve states have banned it in public plans, and five of them have banned it in both public and private plans. So we preserved the right of the states to be able to do this on their own.

LOTHIAN: Senator, yesterday you mentioned that you reserved the right to change their mind if there were any material changes in this bill. What is it that would cause you to reverse course?

NELSON: Well, you know, I don't want to lay down -- throw down the gauntlet here or lay out -- make a bright line or anything like that. But I think you always know material changes. Something that would change the paradigm from where it is. I suppose putting in a public option would do it. Probably at the highest point of the list.

KING: What about the way the House pays for it? $500,000 tax on them as opposed to the Cadillac plans?

NELSON: That would break it. KING: That would break it?

NELSON: Sure.

CROWLEY: Senator, let me -- there's been quite a drum roll up to this point. I suspect there will be a couple more drum rolls and you will get a bill that roughly looks more like the Senate bill probably than the House bill. Next year... NELSON: It has to.

CROWLEY: For you to go along with it.

NELSON: It has to, yes.

CROWLEY: Next year, in June, what is going to be different for the average American that doesn't have health care? So much of this doesn't kick in until 2014. Do Democrats run the danger of signing this bill with great fanfare and nobody gets anything for several years?

NELSON: It's unfortunate that there is that lag, because that's a reality that you've identified. But children will no longer be denied coverage because of pre-existing conditions. I think that's helpful. That's something that the people have wanted. You can go down the list. There are other things like that.

But you're absolutely right. The majority of this doesn't take effect until sometime in the future. It's part of the reason it's paid for the way that it is. And the criticism is there. It's valid. But, on the other hand, you have to move into this incrementally, I believe, in order to make it work.

CROWLEY: But, in effect, it is possible at the end of next year, we would be sitting here with the same number of uninsured Americans?

NELSON: Well, except for children who are currently denied because of pre-existing conditions. That's a possibility. But I also think that this whole idea of state exchanges will be accelerated rather than delayed so that states can set up the exchanges on their own right now and be able to have plans and help people get private insurance through those public exchanges.

KING: Let me ask you in closing here a question. At the end of the first year of the Obama administration, you're a former governor, a senator from a red state. President Obama did not carry your state. It's unlikely he would when he runs for reelection.

(CROSSTALK)

KING: But as a man from the middle of America and conservative America, is your party in the right place when it comes to the budget, health care, other big issues? Or is it dominated by more liberal members from the two coasts and perhaps too far to the left for middle America? NELSON: Well, middle America is far more in the center and in some cases to the right of center. Obviously, that's my preference. And I do what I can to try to pull it, whatever we do, to the right of center or to the center. I think that's what I did with the whole health care issue.

There's no doubt about it that Howard Dean is upset because the public option is gone. By getting rid of the public option, it moved it closer to the center. And that's what I've attempted to do, even with the Medicaid that we're talking about right now. To stop the madness of unfunded and underfunded federal mandates, putting restrictions and obligations on the state, pulling the money back and leaving the state holding the bag. We have to stop that. I think what I've done is the beginning of stopping that.

KING: Senator Ben Nelson of Nebraska, we thank you for joining with us. We'll ask our reporters to stand by. Up next, an update on how stranded airline passengers are faring after the massive snowstorm right here on the East Coast. Don't go anywhere.

(COMMERCIAL BREAK)

KING: Here in Washington and along the East Coast, we're slowly digging out from a powerful storm. It gave us a pretty blanket, but it also caused hundreds of flight cancellations and stranded thousands of travelers. CNN national correspondent Susan Candiotti is making new friends by the thousands at La Guardia Airport this morning.

Susan, tell us the latest.

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: It's not hard to do. I'd be a better friend if I could get them on a flight, that's for sure. Look at how long this line is. You can't even see the ticket counter. That's where they're trying to get to. And then the queue stretches around the corner here down to where you would get down to the gates eventually.

Between yesterday and today, more than 800 flights have been canceled by all the major airlines. They had about 11 inches of snow at JFK, about seven inches here at La Guardia. And all of these people trying to get home for the holidays, let's start with this young lady.

CANDIOTTI: And how much hope to you hold out that you'll be out of here anytime soon?

UNIDENTIFIED FEMALE: It's not sounding promising. They say they can't get flights today. We'll see what happens when we get to the counter. Maybe on the 23rd.

CANDIOTTI: Uh-oh, well, hopefully it will be before then.

In any case, New York City also digging out, they're trying to plow out the streets. They got more than 2,400 sanitation workers out there. And, John, if you're lucky, at some city parks, you get sleds for free and even hot chocolate. Back to you. KING: You might tell those people behind you if they can't get a flight today or tomorrow to go get a free sled and a free hot chocolate. Susan Candiotti at La Guardia Airport for us, Susan, hang in there. Thank you so much.

And when we come back here, more with the best political team on television on the big debates this Sunday. Don't go anywhere.

During the campaign, and I played this sound earlier today, candidate Obama was passionate, saying we need to renegotiate so that we can to reimport drugs from Canada if they're cheaper. In the health care debate, the administration says no, no, no, no, no, don't put that in the health care bill.

I asked David Axelrod earlier today, isn't that a bit of hypocrisy.

(BEGIN VIDEO CLIP)

AXELROD: Let me be clear, the president supports reimportation, as he said, safe reimportation of drugs into this country. There's no reason why Americans should pay a premium for the pharmaceuticals that people in other countries pay.

(END VIDEO CLIP)

KING: We'll move forward on that, he said. But then why not, if you're for it so passionately, why not put it in the big health care bill?

BASH: I mean, that's one of the benefits of running for president and winning, that you can actually try to make good on your campaign promises. And this is actually an example this past week of an amendment to do exactly what the president campaigned on, to allow drug to be reimported from Canada because they're cheaper.

Well, it failed, and it failed because of PhRMA, the very big drug lobbyist. And they had -- they have struck a deal with the White House to give some money towards this health care bill and in exchange they sort of have detente. So this would have threatened to blow up that deal. So the White House, along with the Democratic leadership, they killed this for that reason and that reason only.

LOTHIAN: And I think what you're seeing here, again, and we've been talking about this all morning, is the word compromise. And the administration will say, well, this is what happens during the legislative process, there is always the give and take.

KING: You lobby against your own campaign promises.

LOTHIAN: I guess, yes, even in this case, and, you know... (LAUGHTER)

BASH: I think they are. LOTHIAN: ... from their perspective, they believe that compromise has made this bill much stronger. And that's the line they'll toe.

CROWLEY: Well, one person's compromise is another person's capitulation. And the fact of the matter is, it would have stopped this bill from passing. And he wants this bill to pass.

KING: Our challenge over the next few weeks is to carefully explain to everybody out there watching exactly the money, the dollars and the cents, what it would do to their policies. But until we figure out exactly what the final bill looks like, let's spend a minute in closing on the politics of this.

Candy, been through a lot of these. You remember 1994, the Democrats proposed health care, they didn't pass it. And they were punished. Where are we, what's the state of play now? I guess the point is, how worried should Democrats be? And can Republicans get away with the, no, this is bad, no, or do they need to do better?

CROWLEY: Certainly the political calculation for Republicans is that they can. We've spent a lot of time saying if the president doesn't get this, it's going to -- there's going to be hell to pay at the polls in 2010 because he has got a Democratic Congress and Democratic White House, and if they can't pass health care, they'll be punished.

Well, the flip side of that is, they may also get punished for what they've passed. I mean, that's the calculation. That's why, talking to Senator Nelson, so much of this that is actually going to affect people doesn't happen until 2014. It is hard to sell health care on the come. And I think that's why you're going to hear -- I think the Republicans are better-positioned politically because what are we going to know about? We're going to know about how much it costs, not about what they're going to get.

BASH: And that's why they're not letting up on the Republican side. That is why, they know that they have no chance in terms of stopping the votes because they're so outnumbered. But they also are -- they're basically licking their chops politically for especially 2010, because the rhetorical war, just look at the polls, they're already winning it in terms of what this health care bill can and cannot do.

And when there's not going to be any practical evidence for Democrats to show voters, because it doesn't kick in, Republicans can potentially keep winning.

LOTHIAN: And you heard a little bit about that from John McCain this morning, where he says, you know, yes, we can't stop this, but we can win in the court of public opinion. And so that's what Republicans will be doing. KING: And what will we see from the president? We're closing on the end of his first year, when it came to the stimulus bill, when it has come to health care so far, he hasn't been hands-off, but he has largely said, this is what the Congress does. Let the committees do it. And I'll get involved every now and then when I need to maybe twist an arm or bang a head.

KING: But when he has a Senate bill, assuming they pass a bill, and a House bill, will we see a different president? Are going to have a White House summit and they will hammer out the details? Or is he going to let the House and the Senate delegations go back and forth?

LOTHIAN: Well, I mean, I guess we will know that when it actually happens. But if he follows what he has been doing so far, as you've pointed out, it really has been hands-off. And when it comes down to the wire, there is a lot of pushing that goes on behind the scenes.

So it will be interesting to see, will the president be more engaged, will they come forward with their own, you know, this is what we want you to do, as opposed to waiting to see what comes to them.

CROWLEY: They have been begging the press, they have been begging the press (INAUDIBLE). And I just -- I mean, I am going to vote on the side that he is not going to do it on this either. I mean, because oh, well, now at this stage, certainly the president will let us know what he wants and then he didn't -- oh, well, now at this stage.

I just don't think that there is any history that shows that he is going to actually will jump in.

LOTHIAN: But he remains engaged then.

(CROSSTALK)

KING: ... you have watched these guys every day, and you'll be watching them at 1:00 in the morning when they try to see if they have the 60 votes to continue the debate in the Senate. And we expect they will. Do they think without the president's help they can resolve the different level in Medicare cuts, the dispute over the public option, the dispute over abortion language, the dispute over how to pay for it, a tax on the rich or a tax on Cadillac health insurance plans?

Can they -- those are huge differences. Can they figure that out without the president?

BASH: Absolutely not. They need the president because the thing to keep in mind is this is an intraparty fight. This is the president needing to negotiate between Democrats. And there's no one else who can do it. Everybody says, on the Senate side, on the House side, liberals, moderates, they need the president to engage. Now his aides, to be fair, have been in these private rooms. We don't know, because we're not allowed in the rooms. We see them coming and going throughout the whole process. But he is the guy who everybody says needs to do the final deal.

KING: Well, we will watch that as it plays out to see if the president does play a little Lyndon Johnson late in his first year. Candy Crowley, Dan Lothian, Dana Bash, thanks so much for coming in. And up next, we head out. Tough duty I had. Hawaii's Hukilau Cafe, for a conversation about the economy, energy, and the environment, and what it is like celebrating on a warm and beautiful island.

(COMMERCIAL BREAK)

KING: Hawaii was the 50th state to join the nation, but of course, it was our 48th as we continued our travels in the first year of STATE OF THE UNION. What a fascinating time we had. Let's look at some fast facts about Hawaii. Its demographics, a really fascinating state, 30 percent white, 39 percent Asian, 18 percent, a little bit more of its residents are a blend of two or more races.

The major industries in Hawaii are tourism and agriculture. So, who are the famous Hawaiians? Bette Midler, I bet many of you didn't know that. Don Ho, and thank God for Don Ho, his music still on the beaches there. And of course, this guy right here at the end, the president of the United States, Barack Obama, born in Hawaii.

We had a fascinating vision. We went to the Hukilau Cafe. It's on the North Shore of Hawaii. We talked about the economy. We talked about Christmas in Hawaii. And for those of you who liked the movies, remember the Hukilau Cafe from "50 First Dates."

(BEGIN VIDEOTAPE)

KING: This state is so dependent on tourism money. Are people still coming? Do you notice people -- not as many people or people not maybe spending as much money?

BENNY KAI, TRADITIONAL HAWAIIAN PERFORMER: Not as much before, because I'm the main performer at the (INAUDIBLE) Culture Center. And the count has been really, really low. We used to have three luaus, now we're down to one or maybe sometimes two if we're lucky.

KING: And you run a gallery.

TISH FAIRLY, GALLERY OWNER: Yes, I agree, yes. We -- of course, art is the last thing people would buy, but overall we notice people are spending less, yes.

KING: Even the people who come in to buy are spending less than they might have a few years ago.

FAIRLY: Exactly.

KING: How about you?

SAUL NEWTON, RENTAL CAR COMPANY EMPLOYEE: It seems like it's rebounding a little bit, but kind of lower than in the last few years.

KING: Many people would ask the question, do you feel isolated from the mainland, but in that way, in terms of the economy, it seems like we're all in the same boat.

NEWTON: Yes.

FAIRLY: Exactly, yes.

KAI: Yes, very much so.

KING: One of the big debates in Washington and around the world is climate change and whether places need to change the way they get energy and think about the environment. You have the highest energy costs probably in the country out here because you're remote and because so much of the electricity is generated using coal and more of it with oil.

Does something need to be done about that? Does the government need to get involved or is it individual responsibility that should change the way we consume energy?

FAIRLY: Well, I totally think it's the individual's responsibility. The last thing we want is a bigger government to tell us what to do and, yes, I truly believe in I should be responsible for myself and just be conscious about what's around and then be a good steward of what we have.

KAI: Thing is, for us to conserve, to conserve is very important, you know, water, electricity, whatever we do, even food. You know, when we go shopping, don't go -- what I've learned is never go shopping when you're hungry, because you always buy more than you really want.

NEWTON: I think here especially there is that opportunity though as well to take advantage of those other resources, you know, wind power, you know, wave power, solar power, here more so than most parts of the world. And I think the opportunity cost of not taking advantage of those at this point would be astronomical.

KING: I grew up in a place where we had snow in the winter time. What is Christmas like on an island with no snow?

NEWTON: Coming from a state that has that as well, Oregon, where, you know, at least it's cold during the wintertime, quite an adjustment to make. And December 24th, and it's 80 degrees outside and you have a Christmas tree in the house, it's definitely a little bit of a -- you know, you wake up in the morning and something that kind of takes you away at first.

FAIRLY: It's always happy and merry Christmas here in Hawaii.

KAI: It's pretty nice. FAIRLY: We have a lot of people from the (INAUDIBLE) area come in here and enjoy the state, especially, I mean, so that we can give them -- show them what aloha is. So this is just wonderful.

KING: Santa on a surf board, not a sleigh, right?

KAI: Well, there are Hawaiian musicians that write about Santa coming in Waikiki on big surf board, yes? And for us to have Christmas here in Hawaii is not more just like giving gifts, it's having the opportunity to be with our families. Because we eat big. Thanksgiving, we eat big, but Christmas we eat even bigger.

(END VIDEOTAPE)

KING: A great meal and a great conversation there at the Hukilau Cafe. And just steps from that cafe, we watched some surfers on waves that were 30, some of them 40 feet high. Quite a treat.